DCIT Vs Pragati Agri Products Pvt. Ltd. (ITAT Kolkata)
Income Tax Appellate Tribunal (ITAT) Kolkata upheld the order of the Commissioner of Income Tax (Appeals) [CIT(A)] in the case of DCIT Vs Pragati Agri Products Pvt. Ltd. for the Assessment Year 2016–17, emphasizing that statements recorded during a survey under Section 133A of the Income Tax Act lack evidentiary value unless supported by incriminating material. This case arose when the Assessing Officer (AO) made an addition of ₹2.39 crores to the assessee’s income based on discrepancies noted during a survey, such as differing gross profit rates and the absence of purchase bills. However, the CIT(A) deleted the addition, citing that no incriminating evidence was found to substantiate the claims.
The CIT(A) relied on precedents, including the Supreme Court ruling in CIT vs. S. Kader Khan & Sons, which held that admissions made during survey proceedings cannot be used as sole evidence for income additions. The tribunal noted that the gross profit rates across the years were consistent, and the AO’s enhancement of closing stock was tax-neutral, as it would have an equivalent effect on opening stock in subsequent years. The ITAT dismissed the revenue’s appeal, reiterating that additions cannot be based on assumptions or conjectures without rejecting the assessee’s books of accounts or corroborative evidence. This judgment reinforces the principle that survey statements alone are insufficient to justify additions in income tax assessments.
